High Deductibles - What Is It The Right Option For You?

You should know that high-deductible health plans (HDHPs) are very important role in the health benefits marketplace today. The premiums are lower, which allows many employers, especially small businesses, to provide health benefits to their employees they might not otherwise be able to afford. HDHPs are one solution to the growing problem of the uninsured people today. HDHPs help raise consumer awareness of the real costs of health care, which is having a positive impact on rising health care costs. Research has also shown that people tend to take better care of them selves and go to the doctor less if they have to pay more for it.

With health care costs continuing to rise at double-digit rates each year, many employers have been forced to reduce benefits. They shift more cost to employees or drop coverage entirely to save money. Less than two-thirds of all employers now offer health insurance to their employees do to the cost to the employer or not having enough employees for it to be worth it. Employee contributions to health care costs have increased 126 percent over the last five years. HDHPs, with their lower premiums; offer employers an affordable choice when offering health benefits to their employees, with out it coming out of their pockets.

HDHPs give consumers a larger role in health-care decision-making and create greater awareness of the rapidly increasing cost of services and why taking care of your health is very important. With the exception of many preventive care services, covered employees must pay the deductible - a preset level of medical expenses - before most medical expenses are covered by the plan. HDHPs are often combined with an HSA or a health reimbursement arrangement (HRA), which help plan members meet their deductibles. These plans encourage greater cost awareness and responsibility to the insured, and helps decision-making with the help of consumer information tools. A recent study found that one out of four employers had significantly increased either employee premiums or cost sharing at the point of care in the previous year. The same study found employers who engaged workers in health care decisions were significantly more successful at controlling health care costs than those employers who did less to encourage employee engagement. A study as far back as the 1970s showed that participants in HDHPs used 25-30 percent fewer services than those in a no cost plan and take better care of their health needs.

Aren't HDHPs really just a means of cost-shifting to save employers and insurers money? No. Continually rising health care costs pose a real danger to consumers and the health care system overall. As costs rise, more employers abandon or reduce health coverage for their employees, leaving more Americans uninsured. The proportion of Americans under age 65 with employer health coverage fell from 67 percent in 2001 to 63 percent in 2003, resulting in almost 9 million fewer people with employer-based coverage. High-deductible plans are more affordable than other types of coverage, allowing many consumers to obtain or maintain coverage. HDHPs are not for everyone, but they are an important option in a full range of benefits offerings now available to the marketplace. It is also important to remember that high-deductible coverage is typically offered in conjunction with HSAs or HRAs that help consumers pay a portion of their deductibles. These consumer-directed plans also generally feature 100 percent coverage of preventive care and access to information tools that help consumers navigate the health care system.

Do high-deductible plans prevent consumers from getting the care they need? No. Consumers in HDHPs have the security of knowing they have coverage for major medical events, and most consumer-directed plans with a high deductible include 100 percent coverage of preventive care. Independent research also shows that among people enrolled in HDHPs who were typical of Americans covered by employment-based insurance, variation in use of services appeared to have minimal to no effect on health status. Certainly there are times when consumers with high deductibles face tough decisions about whether to access health care services. It is very important, therefore, that consumers in HDHPs become fully informed about the choices they face so that they can make the treatment decisions that are right for them. Will high-deductible plans replace other health benefits products? While HDHPs plans are an important health care benefits option, the marketplace continues to look for a full complement of health products and services to effectively meet the needs of today's employers and consumers, to meet that demand.